I've been following this since I exited a couple of months ago, and cash burn was one of my reasons. Having only $2.3m left in the kitty, as of 5 weeks ago will make the company look very vulnerable by the end of the current quarter.
Even if SVY still has $1m in the kitty by next quarterly report (only possible with less holes drilled), any change/new strategy will come at a cost. If only around $1m left come end of March, IMHO the market will punish SVY heavily, as a cap raise will be clearly seen by all.
As an example look at the terrible cap raise AVZ are doing, 20% discount to the VWAP in a couple of weeks time!! The SP there has already fallen over 30% since announcement!!
Basically it is not the market to go cap in hand to raise capital at present.
IMHO they should go for a CR early probably ASAP, but certainly before the next quarterly cashflow numbers come out.
It is not an easy choice for management, as the next hole could be the big one, so after would be so much better if it were to happen, but another near miss and low cash is also a disaster waiting to happen.
No-one will like it when it happens, but usually better for existing holders to go early rather than to go the 'hope' alternative.
Just all IMHO.
GLTAH
SVY Price at posting:
22.0¢ Sentiment: None Disclosure: Not Held
